Wednesday, June 25, 2014

Forced Annuitization Harms Elderly Investors

One of our advisory clients came to us with a new problem - the forced annuitization of a variable annuity. The problem - forced annuitization cancels the death benefit on the policy.

With some of these older policies being under water, annuitization creates a stream of payments that are less than the death benefit. For elderly clients who may not need the stream of payments this is obviously a huge problem,

The problem is that often buried within the fine print of variable annuity prospectuses, insurers detail the conditions under which they will distribute a client's annuity in the form of a stream of payments. When signing up for a contract, clients can choose an annuity commencement date — the date on which they will begin receiving income payouts — but insurers usually set an upper limit on the age by which clients must start receiving payouts. Typically, this ranges anywhere between the mid-80s to as late as 95 or 100, depending on the carrier and the terms of the contract.

--- The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters and representation of investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.

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